Joseph Cruz (5:57)

Thank you. Thanks Will for having me. I'm just very excited to be here.

Will Smith (6:02)

Joseph, you bought a construction supply business

Ted Bronstein (6:05)

in December 2024, so you're about 15 months in.

Will Smith (6:10)

You traded spreadsheets for steel toed boots

Ted Bronstein (6:14)

as you yourself put it in an article that you wrote about the experience. You've been doing a lot of writing about it, which I have leaned on to prepare for this episode. Really great articles that we'll link to in the show notes, but we're going to dive deep into this last 15 months of your getting into SMB ownership. Let's start off with some background on you please.

Joseph Cruz (6:34)

Joseph thanks Will. So my name is Joseph Cruz. I'm 34 years old. I currently live in Chicago, Illinois I grew up in the western suburbs of Chicago in a small town called Roselle. Just to give a background my childhood, my parents immigrated here from the Philippines in the 80s. I would say growing up I had a pretty normal childhood. I would say ever since middle school I was always working odd jobs, whether it's working at Dairy Queen retail, laying shingles or building decks. So always had a mentality of just working as a child. Then I went to the University of illinois at Chicago UIC. I graduated in 2014 with a degree in economics and minor in political science and finance. While there I did a bunch of internships at some banks downtown just to get that experience to going into finance. But while also at uic, I started two startups. One was called Career Podium and the other one was called Suited. Well, both of those I ended up, you know, walking away due to several issues, but learned a lot during those two experiences, which gave me an early look of what potential failure looks like. But I would say going through failure you learn a lot.

Ted Bronstein (8:03)

So after Joseph, let me pause you there because already two themes I wanted you to just speak a little bit more on. First it was funny in our pre call because you said you never really considered yourself an entrepreneur and yet you'd started these two things in school and then here you've walked away from a finance career to buy a business. So just, just pointing that out, that's kind of fun. And then the other, more on a more serious note is your, the, the work you just referred to and, and even the path you've chosen now is informed by your own parents experience as immigrants working hard themselves. Give us just more about that and how you think that shaped you.

Joseph Cruz (8:42)

Yeah, I mean I would say definitely when I became an adult, it definitely made me realize how hard my, my parents really worked growing up. You know, I, I think my parents did a really good job making it seem like everything was normal. And them coming here from the Philippines, they're in their 30s, so that's my age right now. So I could not even imagine going to a different country right now, not knowing the language and starting a whole new life. So looking back at it, right, it made me really realize, you know, they were the real ones that took the big risk to make a better life for my older brother and I. And you know, to this day I definitely, that definitely shapes how I look at trying to grow and you know, working hard and all the good traits that they've instilled in me. But it started off with them taking the biggest risk, which is Way bigger of a risk than what I'm doing right now. So definitely owe a lot to them and you know them, you know, giving a life that my brother and I can even have opportunities to do your entrepreneurship through acquisition and whatnot. So.

Ted Bronstein (9:52)

But, but in sort of their hard work, their risk makes you feel like you need to just take advantage of what they've, the foundation they've laid to sort of self actualize and work as hard as you can and go as far as you can sort of thing. How do you think it plays out?

Joseph Cruz (10:10)

Yeah, no, it's. I think they gave us the option to even take this risk and I want to make sure that I can take advantage of that. So they gave us the opportunity to give us good life to give us the opportunity to go to college to take the risk that I'm doing now. So I want to honor them and try to make sure that I continue building a life that you know, they risk their life to, to build for my brother.

Ted Bronstein (10:39)

And I thank you for that. Joseph. Back to the plot you get out of school and pursue what.

Joseph Cruz (10:46)

So I got a return offer at internship that I interned at while at college. It was a small investment bank downtown Chicago. I stayed there for about a year and while there I was doing more so sell side advisory for, for small to mid sized companies. So anywhere from you know, a million EBITDA to 5 million EBITDA. And during that time it really gave me the experience of working directly with CEOs, CEO, CFOs and owners and really gave me the opportunity to understand what questions to ask to really understand the story of the business. Cause at that time I was pretty much just writing confidential information memorandum sims and it really allowed me to you know, at an early age get exposure to how do you craft the story of a business and really understand what, what makes this company tick and what are the, the real advantages. But also sprinkled with you know, some marketing, some marketing on there. So it was good experience there. But I want to take that and move to, to larger corporations. So I moved to Fifth Third bank still in Chicago and I spent my last eight years there. Really great company, love my team. And while there I did a number of rotations from their capital markets group working on high yield and investment grade origination, structuring and execution, also loan origination. All of it was surrounding debt advisory. And the most recent three years there I was covering industrials. So that's manufacturing, distribution, construction engineering. And I would say that's where I really start to like what I'm doing today, which is infrastructure. But I would say at fifth, third it was mostly debt advisory, advising companies on how to structure their debt if they're refinancing bonds, loans, their bank debt, institutional debt, and if they're doing a, you know, M and A deal, then we'll help try to structure that deal. So it really gave me a good look into the larger corporations capital stack and really what makes them valuable versus the smaller companies at my first firm.

Ted Bronstein (13:06)

So that, and it's where you fell in love with water and sewer, right?

Joseph Cruz (13:10)

Yeah, I would say water and sewer really became a topic of interest, I would say in the last two years before I left because I was dealing with distribution companies. So there were companies like Wesco, which is a big distributor, Fastenal Corn Main, Ferguson Waterworks, Advanced Drainage. These are all within the either distribution or the infrastructure space. And I just really appreciated the fact that they were around and it was, it was a really like looked over industry, I think from the ETA space. I've been listening to your podcast for, you know, I don't know since 2023. I read all the books, talked to people online, but nobody was really in the sewer and water space. It was, a lot of people were in this trades, you know, plumbing, H vac or I think we know that, you know, the attraction there. But it's really something that I started to like and I just really want to go into that more. But aside from just the fundamentals, I really liked where we, where I specifically was in Chicago. The infrastructure of Chicago is very old. There's also a lot of fiscal stimulus going into the space. So there's a lot of things at the base that made me want to dig into that. So that probably led me to the end of 2023 when I really started my ETA journey.

Ted Bronstein (14:38)

Great. And so to be clear on your enthusiasm for sewer and water, it was the tailwinds, the fundamentals of the industry, the, the, the, the demand and growing, what was perceived to be growing demand because it's basically a subcategory of infrastructure. Broadly, infrastructure in this country needs a lot of help. There's real dollars being allocated by the government toward, toward rebuilding the national infrastructure. And Chicago in particular has an aging infrastructure. So within this macro trend, you even thought that geographically you were well situated to, to, to, to go after the same Trend.

Joseph Cruz (15:20)

Exactly. In 2021 there was a, a $3 trillion act called the Infrastructure Investment Jobs Act. And I remember when we were talking to the infrastructure distributors, it was a lot of referencing that as industry tailwind. So it was just embedded in my head about the dollars coming in. So that, that really started it. But yes, also I was trying to find a business and an industry that has been around for a long time and will be around forever. Right. The way I position it to people that I, you know, I'm trying to say, why did I even get in this space? You know, everybody goes to the bathroom, everybody drinks water, and it's going to be around forever. And yeah. As to your point. Yeah. Chicago is one of the oldest infrastructure cities in the nation. Just to put in Context, there's about 400,000 lead lines in Chicago and they're doing a lead to copper conversion. That's going to be about 50 years of work. So my business is going to directly benefit from them replacing the lead to copper. And, and in that time, they're also looking at the manhole. They're looking at the different pipes. They're going to be doing upgrading. So there's, there's. That's enough. That was enough for me to really understand the, the benefit of the industry and then go down the, the, the, you know, the hole.

Ted Bronstein (16:44)

Down the pipe.

Joseph Cruz (16:44)

Yeah, down the pipe. Down the pipe. Exactly.

Ted Bronstein (16:48)

Okay. And so. But things are going well at fifth, third, you said eight years you were there. It sounds like you liked your work, sounds like you were thriving. So why the pivot to ETA?

Joseph Cruz (17:00)

So I'd say in 2023, I was always talking with one of my co workers about doing something else. I think it's definitely a joke in finance of getting to a number and then leaving. Right. Either retiring or doing something else. I feel like everybody, most of my colleagues were always looking at finance as just like a stepping stone. But there are some people that were lifers that were going to stay in there forever. So I was always joking with my co worker about this laundromat that was in the corner of my neighborhood. I was like, you know, I'm gonna go in there and then potentially buy the business. Passive investments. Right. So it was always, I was always talking entrepreneurial discussions with my co worker, and he did stuff on the side too, and he was talking about it. So it was always just at the water cooler talking about that, not really talking about finance. So I'd say at the beginning of 2023 to the end, there was a lot of discussions like that. So it really just made me interested in learning more about that. And then I would say the first book I read in the fall 2023 was e myth. So started just really Understanding what was it about buying a business and. And what the options are. So I'd say after that, read all the different books like Traction and then the Buy Them Build by Walking Deibel that you reference a lot. So it was a lot of that, plus the entrepreneurial talk with my coworker that made me really just excited about what the potential was if I didn't stay in finance. So I'd say that was enough. And then I was like, I'll take a look.

Ted Bronstein (18:41)

Is the book E Myth about is business buying in there? I've actually never read it, but I didn't know. But it's about. It's a. It's about scaling small businesses, right?

Joseph Cruz (18:48)

Yeah, yeah, it was about. They talk about this baker and it's talking about like the, the technician, like the manager and something else. But it was really trying to understand from the baker's perspective why it's difficult for her to just scale the business if she's doing everything. So it's really trying to delete need, the different roles and responsibilities. So it was, you know, sort of eye opening of what the potential is with a small business. And you know, from what I've understood from dealing with the businesses back in my first job was a lot of people, you know, become stuck at a certain size because they don't want to duplicate responsibilities and it's a risk to get, I would say, you know, to get past that 3 million revenue perspective. So it was a lot of reconnecting to what I was originally doing at my first job. But yeah, E Myth is not about small business buying like Walker Dibel's book, but it had a story in it about small businesses and, and it's also

Ted Bronstein (19:46)

not about the Internet because with that E in the title, it makes it seem like it's something related to technology and it's also was. I think it was written in the 90s, but that's something of a like misnomer that. That name. Right. Because it's.

Joseph Cruz (19:59)

Yeah. I don't know why. I don't know why they called it Emyth. I'm not.

Ted Bronstein (20:03)

I always thought it was like an Internet book until somebody was like, yeah, ignore the E it.

Joseph Cruz (20:09)

No, that's a good point. I mean, I also recommended Emyth to my friend who's a chiropractor and he's starting his own practice and there's an E Myth book specifically for chiropractors.

Ted Bronstein (20:19)

Oh, funny. So, yeah, well, it's a classic, but it's old enough now that probably a lot of people overlook it, but it but it's probably worth my reading and probably others.

Will Smith (20:30)

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Ted Bronstein (20:53)

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Will Smith (20:54)

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Ted Bronstein (21:09)

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Will Smith (21:12)

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Ted Bronstein (21:26)

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Will Smith (21:28)

Visit pioneercap.com or click the link in the Notes.

Ted Bronstein (21:33)

So you kind of got the idea of buying a business on your own. It wasn't social media, it wasn't at school, it wasn't because a friend did it. It was because there was a Laundromat down the block. And you always like, I'm gonna buy that business, or joked about it or thought about it. And total coincidence that it was a Laundromat, which of course is kind of the symbol of buying small businesses in the Cody Sanchez universe is like, go buy a Laundromat. But that was not. You ultimately did do Cody Sanchez's course, but that was a coincidence. Again, you just saw Laundromat in your neighborhood and it got the, it got the wheels turning. Could have been Cody Sanchez there.

Joseph Cruz (22:10)

Joseph I, I walked, I walked by it every day and I just see it and I see people in there all the time. And I just thought Laundromat was just an easy, you know, intro to, you know, what this life could look like. So, yeah, I just always wanted to, you know, go in there and then talk to the guy. But, you know, so this was at the end of 2023. I go in there and originally I went into Laundromat trying to pitch, putting a vending machine in there and doing some kind of consignment type deal. I honestly didn't even own a vending machine. I was just trying to see what, what would happen. So I go in there and the owner choose me away. I go out, I, you know, gather myself. You know, my wife is right next to me. I'm like, you know, screw it. I'm gonna go back in there and

Ted Bronstein (23:01)

talk she's your wingman here?

Joseph Cruz (23:02)

Yeah, yeah.

Ted Bronstein (23:03)

She. She.

Joseph Cruz (23:03)

She supported me. She was like, okay, go ahead. So I go back in there, and for some reason, the owner just starts opening up to me, starts talking about his business, and I just ask him a bunch of questions. I'm in there for. For about 30 minutes asking about the business, why he bought it, understood why he bought it, and then just throughout the whole time, I was so interested in the business itself. I was. It was like. I don't know, I was, like possessed by just asking him a bunch of questions. So I go out of the Laundromat, and I was just so energized of just the whole potential, what the opportunity was. You know, he was interested in continuing the conversation, so I got his number. So just after, I was just so pumped about just the possibility of owning this Laundromat, even though it was just such a dump and. But it was just so, like, it gave me so much energy. So after that, I was hooked. So then from there, just continued, really going in. And that was at the end of 2023, and then did a bunch of diligence on Laundromat. So that was probably the, you know, the point in my ETA journey where it really made me realize that this. This is. This could be something.

Ted Bronstein (24:14)

Yeah.

Will Smith (24:14)

And it wasn't.

Ted Bronstein (24:15)

Even though you did proceed with Laundromats first, it wasn't about owning Laundromats specifically. It was just about being an owner. That. That was really the kind of the. The opening that this conversation made in your mind.

Joseph Cruz (24:29)

Yeah, yeah. Even though I did not cover Laundromats while at fifth. Third. Right. But it was more so covering the infrastructure space. But yes, it was just the concept of owning something on my own and having just a separate income aside from just having a salary, which was something I was always interested in, and, you know, the option of having a passive investment. You know, I was at my point in my career where I was like, I got to diversify my income. So that's where it was all, you know, coming together.

Ted Bronstein (25:00)

And was this gentleman, this Laundromat owner, was it passive for him?

Joseph Cruz (25:05)

Now he was working in it. He was. He owned the dry cleaner across the street, and he was basically using that Laundromat to wash the clothes from the dry cleaner. So he also mentioned that he owns the dry cleaner and he was potentially looking to sell it. So that also made me even more excited that, okay, this could be a dual thing, you know. So then just. Just that possibility got me all energized. And excited about the.

Ted Bronstein (25:33)

But. But it's interesting that this guy was working in his business and you talked to him and got to see right up close what it was like, his life. And yet you. It's. You still thought that you could do this passively, it sounds like.

Joseph Cruz (25:45)

Yeah, no, I. You know, the. The whole concept of working on the business versus in the business was not something that I was even aware of at that time. I. I didn't even think about working. I didn't even think about, you know, having an operator. It. I was not as mature yet in the ETA journey to understand what it would have really taken. I was just attracted enough with the possibility, but didn't think about all the things that actually needed to be done until I would say a couple months later when I really looked into it.

Ted Bronstein (26:19)

Great. Okay. Anything more to say about the search itself?

Joseph Cruz (26:23)

Yeah, so I would say after the laundromat, after that initial discussion, you know, I started doing diligence on laundromats. Looking up online, came across this YouTube channel called Investment Joy. He's all about laundromats and vending machines. So I really watched his channel a lot. The one thing that I did learn in the laundromat experience was I tried to understand why he bought that laundromat. So one thing that I did was I found out who the previous owner of that laundromat was, and then I contacted him. He owned another laundromat in another part of town. So I. I don't. I found out about him through a vendor of that laundromat, and he gave me the contact information. I went to talk to him, and then I got the real rub of why he sold that laundromat. And then that basically destroyed why, destroyed, you know, all my optimism about that specific laundromat. But I would say the. The broader takeaway from that is during diligence, you need to be very resourceful of where you're getting information. And this was just, you know, I got very lucky with. On. With finding the previous owner of the laundromat because he gave me the true understanding, because he had no incentive of telling me, you know, trying to pitch the business. So I started working with him to also try to buy a laundromat, another laundromat. But that didn't work out. And that's where I tried to become partners with him. So that was probably the end of my laundromat saga, was with that guy. And then I found out about Cody's group through My cousin's husband and I never heard about her at the beginning. So, you know, I joined it, you know, did it for about, I think a month or something. And you know, it was an interesting experience. I would say the biggest benefit there was if I had a question about the buying process, it was really easy to ask the Slack channel and somebody would, would respond. That was the, that was the biggest benefit was having somebody at my disposal whenever I had a question, you know, but yeah, she had a lot of stuff that I already knew from my previous profession. But I would say the resources was the, the biggest thing when you talk

Ted Bronstein (28:47)

about already knowing from your previous profession. So how much of your experience in finance, really eight years more experience than, than that, do you think? How much of that do you think helped you gave you an advantage in buying a business?

Joseph Cruz (29:04)

I think it helped tremendously to first really understand what questions to ask an owner, I think would not have been as easy unless I spent so much time dealing with the decision makers of businesses, you know, the financial analysis and all that and really understanding the numbers and what makes it tick and what makes it efficient and whatnot. I would say that's the biggest benefit and really knowing how to write confidential information memorandum, which I ended up doing with my current business. But I would say the high finance part, advising on high yield bonds, invest, like that had nothing to do with what I was doing now. So I would say it was more so just the, you know, the work ethic, you know, understanding financials, pnl, balance sheets, knowing right questions to ask. I would say that was pretty much the takeaway. I could have probably, you know, done that or learned that in my finance days and in five years. The other, you know, eight years is just other high finance stuff that was not as apparent. But I will say also structuring loan agreements really helped in, you know, working in banking with SBA and understanding a process, understanding what parties are involved. I would say those things really helped with doing this, this whole purchase.

Ted Bronstein (30:27)

Yeah. Well, a lot of people getting into ETA don't come from finance and often are intimidated by the preponderance of former finance people and ask themselves, do I need to come from finance to do this? And my answer is always no, though you should feel comfortable with numbers and there is going to be more learning for you and you should embrace that. And, and, and I've had many people from a financial background say it wasn't really directly applicable. Yeah. Although, you know, to say you come from finance, I mean there's, you know, any number of flavors of finance. So some are relevant, some aren't. Yours happens that it was quite relevant. I mean you were in banking, which is in the, the buy, the buying and selling of businesses. So.

Joseph Cruz (31:16)

Yeah, yeah. And I'd say it was as far as, you know, going back to the exposure to the infrastructure space. Yeah, I understood how Corn Main worked, understand how Ferguson Waterworks worked. You know, read all their earnings transcripts and their letter presentations, but it is nowhere near. I thought I knew stuff but like looking where I'm at now, I feel like I didn't know anything back then, you know, compared to what I know now from just understanding how the operations works of this specific business. I understand the broader industry trends. Right. Just the broader landscape. The largest, you know, public version of my company. But as far as the true operations of mid size and small businesses, it is nothing until you get into the seat.

Ted Bronstein (32:06)

So it, so, so your financial, your years in finance are less relevant now that you're on the other side of your transaction operating, is that what you're saying?

Joseph Cruz (32:15)

Yeah, I mean finance didn't teach anything about operating. I mean it was all, it was all about advisory. And you know, that's one thing of, you know, on my, you know, when you're going to this journey you have to understand really, you know, what are your whys. And one of my whys was to become an expert, you know, and working in finance, it's a lot of, especially where I was coming on as far as leverage finance and debt advisory. A lot of it was just that advisory. Right. There was no skin in the game. There was no saying this is my advice and if it goes wrong then you know, it's, it's on me. It was all a lot of mitigant and covering your actual recommendation, which was something I, I, it was sort of a skill where you say something but also say something to cover that just in case it doesn't happen. Right. So. But the whole ETA journey is completely different. It's the complete polar opposite side of that. It is. You're putting everything on the line, you know, putting your money where your mouth is and really, you know, proving to yourself that you made the right decision.

Ted Bronstein (33:20)

Joseph, where did you find the business that you bought?

Joseph Cruz (33:24)

I found it on biz by sell

Ted Bronstein (33:27)

and tell us about the business.

Joseph Cruz (33:29)

Yes. So the, the business is called a and a equipment supply. It's a construction supply business with a focus on sewer and water. So we also sell to asphalt companies, concrete contractors, state agencies, municipalities. We sell building materials such as precast concrete Pipe. We sell bag products like concrete mix, Portland cement, asphalt mix. We also sell equipment. We're an equipment dealer for the major construction manufacturers. We also do equipment repair. So anything small engine repair, we can do that. And we also rebuild engines and then we also sell just the miscellaneous tools that you'll find at Home Depot. It's a business. Yeah, say something.

Ted Bronstein (34:17)

I was just going to say you carry on. Carry on.

Joseph Cruz (34:20)

Yeah, it's business has been around since 1982, and it's in Bensonville, which is directly next to O', Hare. So very centrally located as far as going northwest and south in the Chicagoland area. And we also do a lot of work at o', Hare, which is the largest construction, ongoing construction project in Illinois. It had six employees at a general manager and then it ran about 15% EBITDA margins.

Ted Bronstein (34:53)

And what was the revenue?

Joseph Cruz (34:54)

The revenue when I bought it was about 1.2 million,

Ted Bronstein (34:59)

15% EBITDA margin. So we're looking at under 200,000 in earnings.

Joseph Cruz (35:04)

And sorry, the, the Marketed SDE was 270,000. And then when I was actually underwriting the deal, I was. I got comfortable at about 240,000 of SDE. So EBITDA. Yeah, EBITDA, you know, excluding the, you know, the, the owner salary was in the high one hundreds.

Ted Bronstein (35:23)

Yep. Is it a physical location? I mean, I know people. Is it a. Is there a retail component where contractors actually come in and buy stuff from you guys, physically or not?

Joseph Cruz (35:35)

Yeah, there's a brick and mortar store, a showroom that we're actually doing some renovations right now. So you walk in there, there's a showroom, some office area, there's a warehouse and then yard space. So contractors come in, they either pick up materials for on the job, and then we, when we check them out that we have a lot of the miscellaneous tools that it was everyday use. And then they get that and then. But we also do a lot of shipments. I would say we do about 60% shipping to the actual job site or warehouse. And then 40% is customers coming in, picking it up.

Ted Bronstein (36:10)

Great. And so it's in sewer and water. So that's pretty remarkable that you found a business right squarely in the category that you were looking for.

Joseph Cruz (36:19)

Yeah, yeah. No, it's. When I saw that most of their revenue came from sewer and water, I was immediately attracted just because I knew of companies that did that and just understood the attraction of it from trying to sell all the, you know, trying to do marketing mode for all the bigger companies. I knew that there was Immediate attraction there as you know, as, as unique as that sounds. But yeah, once I saw that I was like there's, there's something here. So then from there you know, did the, the full diligence on the business.

Ted Bronstein (36:48)

Yep. And so all of the materials and tools that are sold through ana. It's the name of the business.

Joseph Cruz (36:56)

Yep.

Ted Bronstein (36:58)

Are to then go into projects. So it's tied to the, to maintenance and, and construction or just kind of like all maintenance. How do, how do you think about. How should we think about that ver new construction versus Maintenance? Because it's a very different sort of quality of revenue or cyclicality.

Joseph Cruz (37:17)

Yeah, no, I mean I would say that is actually a very difficult point to delineate because a lot of my customers, you know, they don't really, they don't really understand the maintenance part versus like new construction. A lot of my customers are just yard guys. Right. Or like estimators that you know, put in, put in a request. So to really delineate new construction versus maintenance. It's. Yeah. I can't really answer the exact breakdown of that, but I can just tell you it's all tied to. Towards projects and construction. You know, there's the, the one thing that made me really interested in this business was they did not do any bidding and estimating on jobs. It was all contractors knowing the inventory that we had and they would come in when they need it for a job. So you know, when you're looking at different distributors, there's a big difference of the distributor that is bidding and estimating on a lot of jobs versus walk ins when they're just coming in. There's a difference in margin of how those businesses and how those businesses business models differentiate. So once I saw that there was also an opportunity to grow revenue from doing actual bid and bidding and estimating. So that was one thing that I really got interested in that they're around for 40 plus years without proactively going out there and trying to get full jobs. So there is something there that made it very interesting to, to peel back the, the onion.

Ted Bronstein (39:01)

Interesting. Okay so you're, you're serving almost exclusively walk in business. So people who, you know, contractors who, who need something right now, it wasn't initially spec or bid or estimated into the job. And so presumably that stuff is higher margin.

Joseph Cruz (39:17)

Correct.

Ted Bronstein (39:18)

But, but less predictable. And so if you. So you wanted to. To get into the bidding and estimating it's going to be lower margin but you can build out a pipeline, you can really make it more systematic and do forecasting and so on and, and, and, and probably all that aside is probably just like a whole nother, you know, pot of revenue to go after.

Joseph Cruz (39:38)

Yeah, I mean the way I would summarize the, the business and I actually got this from another like kind distributor but they're in the more rebar distribution is we're in what is called like the oh business where the contractor or estimator as you said, misestimates how much is needed on the actual job. And we carry the most commonly stocked items for my end markets, sewer, water, concrete, asphalt, excavation, etc that we have that you know, mix of inventory where they'll always come back coming, they'll always come back to us. So as you said, yes, it is a higher margin business. And from a gross profit perspective we're about 40 to 45% which is very different from corn Maine which runs about 25 to 30%. And some of my other competitors pretty much run in the high 20s because it's due to the difference of the business model, the ocean nature of the business. Yeah, so I knew that they had that. So if we were able to tack on two, three jobs, right, that were 200, 300,000 each then you know, we could automatically increase revenue by you know, a decent amount. So I knew it had good enough staying power from that perspective. And it's been around for you know, 40 plus years. So it had staying power, you know, enough for me to buy it.

Ted Bronstein (41:03)

Yeah, yeah. And Joseph, just with the current business model of contractors coming in when they're missing something on a, on a live job or why is Home Depot not there? The solution for them is this, is this more specialized stuff that you sell than they can find at Home Depot?

Joseph Cruz (41:20)

Yeah, I mean at Home Depot which I actually Home Depot, Lowe's and Menards, I always look at their prices to try to be somewhat competitive. I'm always going to be higher than them just given the nature of their business. But yeah, you can definitely get a lot of the stuff that I have at Home Depot but you can't get all of it. So the value there is just trying to provide that one stop shop for certain contractors. And you know, it was marketed as a one stop shop but it is not a one stop shop. We're like a majority of the stop shop. Right. So we have enough of, of the stuff and we're very like, we're very conveniently located which is probably the, the biggest differentiator of my business versus my competitors is I'm just centrally located directly next to O' Hare and there's a lot of jobs in the surrounding area. And you know the southern guys that are going north, they stop by, the northern guys going south, they stop by and vice versa. So the location of, of my business is, is everything. So that is, that is a very big reason why it's.

Ted Bronstein (42:27)

And what about weaknesses to the business, Joseph? What, what, what did you see as things that were not so great about it?

Joseph Cruz (42:34)

Yeah, the weaknesses. Project based. Right. That's, you know, big thing that I remember even back at fifth third of why we hated construction businesses was the, the, the project based nature. And my mitigate into that was well it's been around for 40 years and it's held revenue in the 1 to 2 million range since the 90s. Right. So if it's, if it's holding that, then it's doing something right. And my other caveat there was I looked during 2020 revenue decreased I think about like 5, 10%. But it wasn't materially different than you know, what most businesses were impacted by during COVID So that was, that was one risk. Another risk was seasonality. Very seasonal. You know, we make all our money from March to November, December to February is negative profit months. That was something that, you know, something I learned is if you're going to buy a construction business that's seasonal, don't buy it in December like I did. It was, it was a tough January and February of 2025 emotionally. But, but that was, that's one risk. And my mitigant there was I was gonna try to improve the services side of the business. The service side is really nice. It's a higher margin type aspect. It's a value add of the business that none of my competitors have. If my mechanics are working eight hours a day, eight hours of they call wrench time, then it should be about 65% margin per job. But that's not always the case. There's downtime, ordering parts, talking to customers. So there's that aspect. But that was the part where I was going to try to increase the, the winter maintenance because a lot of contractors like to winterize their, their equipment during the winter. So my goal was to grow that during the, the off season which would potentially offset the, the seasonality. I'd say those are the two big. And then the other thing was just the age of the employees, you know, six employees, but three, four of the six employees were in their 60s, one two of them was in their 70s. So that was a big risk that I had to figure out at the Beginning. So yeah, seasonality, project based business. And that employee age was the biggest risk.

Ted Bronstein (45:09)

Great. And going back to the longevity of the business and the consistency of revenue. You said $1.2 million in revenue going back to the what, 2000s, the 90s?

Joseph Cruz (45:23)

Yeah. I mean the oldest financials I had was 2006, 2007 and it was, it was on paper and I saw that they did 1.3 million and it just, it just, it, it amazes me but also really makes me question how is this business still around 1.5 million for the last 20 years? And the reason is the nature of the business model. Right. It is a business where we depend on people coming in when they need something. There's no proactive sales efforts there. Right. Because we're a high margin business. You know, we're last, you know, when people need something, they come in and get it. So it's, it's like it's a convenience business model which is very hard to, to grow.

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Ted Bronstein (47:30)

well, I guess it's also like, well I mean you said you do a lot of shipping. I think 60% is shipping. So. But the way I hear you talk about it is, is, is very much like people coming in, even though that only represents 40% of the revenue. But anyway, I guess what I was going to say is that if you just think about sort of any store, any retail footprint, eventually it will reach its ceiling and it's hard and it kind of has a natural ceiling and it's hard to push a business that is constrained by four walls beyond its natural ceiling. And I wonder if that's kind of a dynamic here. But I guess no, the answer is no, because you still have 60% of your revenue that's distributed out. That has nothing to do with the retail footprint. And that, you know, arguably should have been growing.

Joseph Cruz (48:16)

Yeah, yeah. It's the, one of the biggest struggles in the first year was when trying to figure out how to grow revenue. And you know, my main focus in the first year was through service was growing the equipment repair side because the material to grow a commodity based business is, is difficult just because the, the old adage is, you know, what's your price? Right. It's, it's just a price competitive thing and they'll, they'll pretty much say what's your pricing compared to the largest competitor that I know of. And then, and then it's the battle of trying to deliver the whole value of. We also have equipment repair, rental, we have the tools, we sell equipment and then the materials. But you know, it's not as easy to you know, package that value and make contractors understand that. Right. All they're going to ask about is the price. So there's something that we're working on right now to combat that. And you know, the second year has definitely gone off to really good point versus the growth of growing the commodity side in the first year.

Ted Bronstein (49:25)

Great. Well, we're going to hear a bunch of your, what you've done as owner. But I, before we get there, I want to hear about the price of the business and how you structured the deal. There's some, some interesting nuggets in here. So what was it selling for?

Joseph Cruz (49:40)

I don't remember. Yeah, I remember what, what it said on biz by sell. But I do know I bought it for 536. So the market at SDE was about 270. I was underwriting it at about 250. So that's about two and a quarter. I knew that these businesses would sell two to three times. I definitely want to be on the lower end of that. I was pretty much looking at what was the DSCR coverage. I want to be at least 2 times and then so my DSCR was so 240 as far as the headline SD that I was underwriting to. But taking out the projected salary for myself, about 60 grand. That was about in the high one hundreds and my PNI was just below 100. So my DSCR coverage was just over two times which I was comfortable with. I was not willing to go below that just because that's the cushion that I, that I wanted. So. And I knew it was going to be in the, the low twos from a multiple Perspective. So that's what I ended up purchasing it for.

Ted Bronstein (50:47)

Let me, let me repeat some of that back for the audience. That was great, Joseph. So the, after the earnings, the SDE seller discretionary earnings that you had at around 250. But then if you take that down another 60 to account for you owner operator's future salary or a future GM salary of 60,000, that gets you to around 190. Your principal and interest payments, your P and I payments for the SBA loan were going to be about 100 a year. So 190 is almost 2 times 100 which is, that's the debt service coverage ratio. That's how you get to that 2 number. And that's generally in our world, I don't want to say conservative in a, in a bad way, but it's, it's conservative in a good way. Um, and, and it sounds like you wanted that. Yeah, you wanted to be conservative.

Joseph Cruz (51:40)

Yeah, the way I looked at it too was you can look at the, the, the EBITDA cushion and then my cushion from there was about like 20, 25% before my, you know, my DSCR coverage would be below one times. So I just wanted to have adequate cushion there. So I feel like for anyone buying a business you should not have DSCR coverage below two times. That means you're going to be, you know, super over levered like my exact P. And I was 90 grand. So it was a little above two times. And then I also looked at the cash on cash return from, from you know, just a return perspective. So my cash on cash expected for the first year was about 90. So that was you know, one thing that you know, also guard railed my, my actual purchase price.

Ted Bronstein (52:31)

Talk us through that please Joseph, with numbers and how you got it that got to that 90% number.

Joseph Cruz (52:36)

Yeah, so the, the, the 9%. So I put in 75 grand in it. So when I looked at the actual net income at the end of the year it would be you know, 100 minus 90 or 190 minus 90 to get 100. So it was about, so 75 divided by a hundred, it was about 80%. So that's how I looked at my, my cash on cash return. That was my expected the actual little different.

Ted Bronstein (53:05)

Okay, but, but, but, but also Joseph, I have to press on that because you're not taking into account your own salary there or did I misunderstand?

Joseph Cruz (53:15)

No, yeah, it was the 190 which was the 250 minus the 60 to get to the 190 and then.

Ted Bronstein (53:21)

Oh yeah, the one.

Joseph Cruz (53:22)

Yeah. 190 minus the, the P and I. So it was expected net income of 100.

Ted Bronstein (53:27)

There you go. Yeah, yeah, yeah, right, yeah, right. Which, right. Which was a little different. Okay, great. But, but certainly you put down $75,000 in the next year into a business, you generate a hundred thousand dollars. Not a bad cash on cash return to say the least.

Joseph Cruz (53:44)

Wonderful, wonderful.

Ted Bronstein (53:45)

Of course, yeah. On paper.

Joseph Cruz (53:47)

Right.

Ted Bronstein (53:47)

And we're gonna, we're gonna hear about this year1. But let's also hear Joseph, about like how first of all the salary that you're leaving or kind of what you're walking away from in finance land and how you timed that because there was a little bit of overlap there. Talk us through both of those, please.

Joseph Cruz (54:06)

Yeah. So when I was looking at the, the business, I signed LOI in June of 2024. Typically in finance you get your bonuses in finance, February. So once I did that, I knew that I had to stretch this diligence for almost a year, you know, you know, three quarters of a year. So I was trying to balance the expectation of the seller, my diligence, and also the timing of my bonus. Because once I got into diligence, I knew that I was going to eventually leave. So I want to make sure I was as close as possible to that bonus time. So you know, when I was leaving, so the salary for, so I was a VP at fifth, third, so it was about 200 grand. So that's the, that's the salary. But, but as far as like the bonus, it could be, you know, one times to one and a half times that depending on how good it was. So you know, definitely leaving from a salary perspective. Right. Going 200 to 60 or 75 right now, you know, it's a lower amount, but I just need to make sure that my fixed expenses from a living perspective was, was covered. So I would say the topic of trying to match whatever salary, it's different, I guess depending if you're coming from a high paying job versus low paying, it's just different. I was not looking to match what I was making. I was more so looking what is the opportunity of this business and what I think I could grow it to. I was also looking at the, the different benefits of, you know, building your own business. Right. Being an expert, all the whys that I, you know, worked on trying to really understand. So there's from a dollar perspective, I think the trying to match your salary is the. I just wasn't looking to do that. Yeah, yeah, yeah.

Ted Bronstein (56:01)

So well, and, but just to add to that, Joseph. So to be clear, it was 200, 200,000 base, but your bonus could, could reliably get you into the mid six figures.

Joseph Cruz (56:14)

Yeah. Yeah.

Ted Bronstein (56:15)

Right.

Joseph Cruz (56:15)

Yeah.

Ted Bronstein (56:16)

So, so you're walking away from mid six figures.

Joseph Cruz (56:18)

Yeah.

Ted Bronstein (56:20)

Low mid six figures. Call it $400,000,000 a year.

Joseph Cruz (56:23)

Yeah.

Ted Bronstein (56:24)

So while you're not looking to replace $400,000 a year, the bigger the difference between the money you're leaving on the, the salary you're leaving and the salary you're coming into as a small business owner, the more you have to, you know, feel good about your whys. I mean it's, it's inevitable to consider, to not consider the disparity there. And so just, just worth pointing out. Go ahead.

Joseph Cruz (56:48)

The one thing, the one thing I would add there is, you know, in, in finance and any high paying job, I think it's, it's very difficult to live a low cost life, right. When you're making that amount of money, you're just spending hand over fist. And I know in the pre call I said I didn't really spend much, but not really looking at it, I feel like when I was making a lot of money I would just spend on whatever. Right. Even though my fixed expenses were low, my discretionary spending was pretty high. Eating out, going on vacation. Right. Spending on watches. Right. You know, buying a car, etc. Right. There's a lot of that and the discipline of controlling that while you're making a lot of money is very difficult. So the one thing that I also learned that you know, wasn't really a, you know, something I thought about during diligence. But now my life now, even though I'm making less of, of income, my control on all my costs and budgeting is way better than what I had when I was in finance. Just because when you know you're gonna have money coming in, right. Like spending a dollar, whatever, just spending $10,000, you know, over the, the weekend or the month, you know, it doesn't, doesn't really impact you which is something that it, it creates what is called like lifestyle creepy.

Ted Bronstein (58:19)

Sure.

Joseph Cruz (58:19)

When you're in finance and you know you buy a big house, right. You're, you're levered to the gills, you have a mortgage payment, car payment. So I made sure before I got to that point I really like now I'm here, right. So I'm luckily I'm not at that point where I have heavy fixed expenses. But that was one thing that I want to note on, you know, leaving that high paying Job. It's a different mindset of how you're living life now. I'm just living way more, I would say responsibly. Yeah, I'm living. It is.

Ted Bronstein (58:53)

I mean, yeah, but, but it was, Was there any discomfort in tightening up your lifestyle? The fact that you couldn't just, you know, blow money? I, I know that's a problem with the fortune, but, but it did mean that you had to get your arms around your lifestyle. Um, and so, you know, it can be hard to, it can be hard to kind of step back or at least feel like you're stepping back. Even though we, we all understand that there are these whys to going down this path that are much bigger than, you know, blowing money, being able to blow money still. It's like, oh, I, I have to watch the, watch my money now. And before I didn't. And that's a change to your day to day.

Joseph Cruz (59:35)

Yeah, no, I mean, I would say the, the change is not, was not as difficult as I expected. I think with going into a, the ETA journey, owning your own business. I had to correct a lot of ways that I was living, whether that's, you know, health or, you know, habits or, you know, financial control. So a lot of that parts of my life really improved, I would say, in the past two years, all while going on the journey of buying my own business. So even though I had to reduce my, my, my spending, it was all for the better. Right. From just how I lived My, my health, my habits, it all got better after living, after, you know, pursuing this. And I don't know if it was because I had to or I chose to, but I, I chose to. Right. But it's like controlling my cost was just, you know, part of having a better life overall. So that's how I looked at it. But yeah, I am walking away from a lot of money and let's say I was able to, you know, do, you know, improve on those three things while at fifth, third or making a lot of money? Yeah, it could have been great, but I didn't. Right. So yeah, that's how I look at it now. And you know, the, the overall, you know, theme of this is I chose this option, so it's going to be the, the best option that I'm, that I made. So that, that's, that's how I think about it.

Ted Bronstein (61:18)

That's great. And, and to be clear, you don't have kids.

Joseph Cruz (61:23)

I do. I have. So I have a four month old. So she was born. Yeah, yeah, she was born in October. So yeah. Left fifth, third. Bought a business, had a kid. It was a lot last year.

Ted Bronstein (61:36)

Okay. Okay. Well, congratulations on, on being recently a father. It's. But it sounds like it. Where I was going with that question was all of the expenses that can be associated with kids and you're starting to see them, but you're not there yet in a big way, you'll get.

Joseph Cruz (61:53)

Yeah, no, I mean I had to make sure. So for the first year of any. I didn't take a salary. I had enough savings to, you know, invest back into the business if need to be, but also cover all my fixed expenses. So yeah, I would say anybody pursuing the journey, you need to have at least a year or two of fixed expenses and more. I don't think I could have done this without having that cushion and putting it all into the business. There's no way I would have done this.

Ted Bronstein (62:22)

Yeah, yeah. Well now that also has to do with the size of business you bought though, correct?

Joseph Cruz (62:27)

Yeah. Fair.

Ted Bronstein (62:28)

If you'd bought a bigger business and there was more cash coming out of it, you wouldn't have had to have such a big cushion.

Joseph Cruz (62:33)

Yeah, but that was part of my criteria was buying a business that allowed me to have that amount of cushion. I did not want to buy anything bigger.

Ted Bronstein (62:43)

You mean you didn't want to spend more of your own cash resources to buy something bigger?

Joseph Cruz (62:48)

Yeah.

Ted Bronstein (62:49)

So say, say more about how you chose the size because we haven't said. But it's, it will be obvious to regular listeners this is a pretty small business in terms of earnings and in terms of everything. Number of employees and so on. Although God gotta love that 40 year longevity. That's amazing. Yeah, but, but a business that's, you know, thrown off, call it 200, $250,000 of earnings, quite small. How did you. Is there more to say about how you thought about that?

Joseph Cruz (63:15)

No, I think the only way that I thought about the purchase was looking at the DSCR coverage, the cash on cash return, my equity into the business and also what was my leftover savings after I put that equity in. So once I got comfortable with all of that, that's how I looked at just the size of the typical business.

Ted Bronstein (63:41)

Yep, we've heard. Remind us what the price was that you. 536. Okay. And tell us about the structure here because there's some, some, some interesting.

Joseph Cruz (63:51)

Yeah.

Ted Bronstein (63:51)

Pieces to that.

Joseph Cruz (63:52)

The purchase price, the uses was 536 for the consideration, it was 128 for working capital and then like 20 grand of the professional fees. And SBA fees or whatever. So total was in The, I think mid-600s or mid-high-600s. My my uses was 75 equity, 55 seller notes and then 550 SBA loan. So that was the source and uses. But there was a caveat to that where there was an earn out from a side letter that I had posted close. And there is also with withholding of 25 grand or a holdback where I could have used that holdback if there was any unexpected claims on the business, you know, legal vendor, etc, that I could have tapped into to rectify that liability.

Ted Bronstein (64:51)

Let's take both of those in turn because your structure was pretty standard up until the earn out and the holdback. So the earn out was a side letter which you know, the SBA doesn't allow formally, but you were counseled that it is something that people do. So we are not advocating that here on acquiring minds, but it is something that listeners should know about. It happens. Although my, my sense is that as SBA gets stricter across the board and is introducing more and more rules and tightening, tightening up who gets loans, they'll probably come down harder on this. In fact, I think they explicitly said in a recent, in a recent rule change, no side letters, which I believe anyway. But what a side letter is is you make a separate agreement with your seller. Yep. That is a. Basically an earn out that in earnouts themselves are also not something that the SBA you can have in an SBA structure and you don't. It's kind of something done to the side that is not part of the formal SBO loan process. Does that all sound right to your case?

Joseph Cruz (66:00)

Yeah.

Ted Bronstein (66:01)

And what was the earn out? How was that structured?

Joseph Cruz (66:03)

The earn out was 50 grand. And the only reason why I added that earn out was two weeks or three weeks before close. The seller said that the general manager was going to retire. So once I found that out, I was like, okay, well I gotta have additional coverage in the, you know, the, the longevity of this business. So it was the addition of the earn out. Plus I told the seller he has to stay on for six months before I, you know, before he can go.

Ted Bronstein (66:36)

And. And before that he was just gonna leave on? Yeah, when he like immediately.

Joseph Cruz (66:43)

I, I forgot. But it was probably, you know, pretty close after.

Ted Bronstein (66:46)

Pretty quick. Yeah, pretty close. Soon after closing. And the earn out was what? What was what? That the business has to generate more revenue.

Joseph Cruz (66:53)

35 million. Yeah. Off of revenue. But if I could have done it again, I would have probably done it over profit. If I, if I can do it again and if, whatever, if that, you know, if this happens again, I would have done an earn out based on profit just because revenue is an easy figure. And from a buyer perspective, you know, profit, you can, you know, run a lot of stuff through expenses that could lower it, that is beneficial to the, to the buyer.

Ted Bronstein (67:21)

Right. Although a seller is probably going to push back for that very reason because you, you can play around with it, you can play around with profit. Okay. And, and, and by the way, the earn out, so you were basically, you introduced this earn out to protect yourself, and it was not because earnouts, I think traditionally are to incentivize the seller to, you know, if they're going to stay in the business, to keep things, you know, marching ahead and to reach for revenue and push under the new ownership. Really, you were treating this as a way to mitigate your own risk because the GM's walking, correct? Yeah, yeah. And so, and, and so the, the way that for the listener, you can, can arrive at, at a, at a SBA allowed risk mitigant is the forgivability of the seller note. So you can, you can structure the seller note or basically say that the seller note will be forgivable so you don't have to pay all of it back based on certain criteria. So it's effectively like if you know, your seller note, I think you said was 55,000, you could make seller forgivability where. Oh, well, if we don't hit this certain revenue number, if we, if we don't maintain the same revenue in the first year or two, then we don't, we only have to pay you back half the seller note or none of the seller note. It's another way, it's another structure that the SBA does allow importantly to help mitigate, to help mitigate risk.

Joseph Cruz (68:44)

Yeah, I didn't know, I didn't know about the forgivable seller note. The earn out was advised by my lawyer. But if I knew about the forgivable seller note, I would have probably done that.

Ted Bronstein (68:56)

Yeah. Yeah. Well, and the only reason I'm highlighting it is again, because under SBA rules, you can do forgivability. So that's, that's a, that's a bonus. But also because the way to think about forgivability versus earn out is earn out is generally like incentivizing the seller to keep pushing and reach new revenue goals under the new ownership. And forgivability is more defense. It's, it's, it's risk mitigation so one is incentivizing growth, the other is protecting downside. Yeah, the, the and then on the holdback Joseph, So, so say how that was structured.

Joseph Cruz (69:31)

The holdback was just a reduction of the cash consideration at close. So I mean I guess if you look at the loan agreement it was like you know, purchase price less, any work working capital adjustments less the holdback amount of 25 grand. And the 25 grand was pretty much tied to any claims on the business from third party people. So whether it's like you know, if it was, if the business was sued or if it was, you know, there was like vendors claims or whatever because this was a, I did a stock purchase of this business so I had to be extra careful with you know, anything that came from the pre existing entity. So that hold back was you know, instilled just to cover that that fact.

Ted Bronstein (70:15)

And, and the way it actually the mechanics of it was just that the 25 grand just sat in your state in the.

Joseph Cruz (70:23)

Yeah.

Ted Bronstein (70:23)

So it wasn't like escrow or something like that.

Joseph Cruz (70:26)

Correct. Yeah. The cash mechanics of the, of the holdback and the earn out was the seller just left the 75 grand in cash in the business's operating account. So there was no rewiring of anything. So instead of you know, the owner taking all the cash and then wiring it back, he just left that money in there which made it very easy. So I, that, that was like a very like nice thing to do from his perspective and just made it convenient for everybody. So.

Ted Bronstein (70:59)

Yeah, and that's absolutely what you want is to be the one with the cash in hand. Whether the, what's the phrase in the attorney phrase that like 9, 10 of the law is possession or something. Point is you want to be the one with the money in your hand and they have to claw it back from you, not the other way around.

Joseph Cruz (71:18)

Yeah, yeah, yeah, definitely agree.

Ted Bronstein (71:21)

And, and actually this is playing out now, right Joseph, because the, the vehicle age was a factor that you didn't see and so tell us about that.

Joseph Cruz (71:33)

Yeah, so in a lot of these small businesses they run the equipment to the ground, especially heavy capex businesses. So there's three trucks and today one of those three trucks works and there was a lot of maintenance and repairs on the two trucks. One of them just doesn't even work anymore. So I can't even use it. So there's going to be some claims on just the unexpected expense from repairing those and buying a new truck that I'm going to use as you know, evidence to you know, Try to reduce the, the cash back. But again, it's going to be just. I have a good relation with the seller. I'm going to talk to him honestly and we're going to come to something in the agreement. And the seller was a great guy. You know, I still talk to him almost, you know, every two weeks. I'm definitely going to talk to him forever. And this is just one of those trust things where I have to be like, you know, this is what happened. Can you help me out? And it should be a meeting of the minds and you know, hopefully the conversation is, you know, mutual.

Ted Bronstein (72:43)

Yeah, yeah, absolutely. Why the stock purchase versus asset purchase distribution.

Joseph Cruz (72:49)

So there was so a, A they also sold to state agencies like the Department of Transportation, Illinois Tollway Authority. So there was, there was agreements from those agencies tied to the actual tax ID number. So if I bought the asset, then I would have to redo that and it would have been a mess. So even though I can't amortize the goodwill, which was about 100 grand, I mean, I'd rather keep those agreements because one of the things that I liked about the business too was they had agreements to sell to the Department of Transportation that was recurring revenue, which was nice. So I did not want to risk with that at all.

Ted Bronstein (73:34)

Absolutely. And the real estate where you guys are, it sounds like the business does not own that, correct?

Joseph Cruz (73:42)

Yeah, we lease it.

Ted Bronstein (73:43)

Awesome. Joseph, I want to spend time on many of the takeaways that you put pen to paper and shared on your LinkedIn. But first you did a second small acquisition quickly after being into the business. What did that look like?

Joseph Cruz (73:59)

Yeah, so I bought a, or I did a little add on for mechanics business. It was just a, a guy in a shop. He was, it was somewhat brokered by one of my customers where that customer also used that mechanic. So that my customer knew that, you know, we could also use another mechanic. So he sort of broker the dealer and you know, I really thanked him for it. So the mechanic that, you know, we ended up acquiring his lease was coming up. He was basically getting kicked out after being there since the 90s. So he did not want to go through the headache of finding a new place. Right. Signing a new lease and all that. So while I was doing diligence in December, the seller of A and A brought us together so I could meet him. So the way we structured it was the seller was gonna purchase half of the or was gonna fund half of the purchase price of that guy's business and I was gonna fund the other 50%. So it worked out. That was actually like looking now that was the best decision I ever made. So at the end of December, I just did a bill of sale where I just purchased his inventory equipment and then he just, I just hired him as an employee and then so he brought all over all his customers, all his vendors. And then, yeah, the first year I would say our service was up. Was it. Our service was up like 200 something percent just from the, you know, current service work plus bringing that guy on. So it was, it really worked out then. That was actually a strategy that I'm definitely going to leverage in the future is acquiring services businesses. Just because when you acquire the service or the repair shop, then you can cross sell all the different materials that you have to those contractors.

Ted Bronstein (75:58)

Yeah, yeah. And so is there in your world, is there a lot of kind of one man mechanic type businesses to acquire bolt on?

Joseph Cruz (76:09)

There's a lot of mechanics, good mechanics that you know, to them and two other guys, three other guys, you know, they, they had a really good skill. They try to grow the business but then they just grow it to a point where it's just a lifestyle business where they're, you know, earning a comfortable wage but they don't really want to push it. So, you know, one of my growth strategies is definitely acquiring a similar, doing a similar playbook and looking at other service companies.

Ted Bronstein (76:37)

The timing to get your bonus from your employer, that worked out, right? So you did stay on through then. So how did that work with the transition in day one? And what did that look like for anybody out there who, who might not want to quit before they actually take ownership?

Joseph Cruz (76:54)

Yeah. So I closed on business December 10th. My bonus was coming in conveniently at the latest time in my eight years at fifth, third. It was going to come at like the second week of March. Long story short, because I know I'm not going back into finances, I didn't tell anybody that I acquired a business just because there are certain like potential rules with owning another business and you have to fill out a bunch of documentation. So I just didn't say anything, which is, which is very risky. And you know, for the first week or two, I was very scared about somebody finding out. But after a month I was like, nobody's gonna find out about this small business. Like nobody cares. Right. So I was pretty much, you know, working full time. You know, it was still during the days of, you know, being able to work from home. So, you know, during my days work from home, you know, work a couple hours, then I'd go to the business. So from December to March, I was probably at a. A day or two a week, and then the rest I was at fifth, third. So the one thing I would say to that is, even though you know you're gonna leave and pursue something else, you should still focus on your W2 and try to make sure that you still love it. Just because if, you know, you're one foot out the door, your last two, three months is gonna be absolutely miserable. So you should just try to convince yourself you still like the job just because it'll make it go by faster. So, yeah, I end up got. I got my bonus on March, what is it, March 10th or whatever that Friday was quit the. That morning of. And then I had, I remember that day in that afternoon, I had the, the eight week meeting with our doctor for the baby to, you know, make sure that the baby was viable. So it was a great. It was a. One of my happiest days. Happiest days ever.

Ted Bronstein (79:01)

Well, here we are on March 2nd, so we're, we're coming up on the anniversary of that very day.

Joseph Cruz (79:05)

Yeah.

Ted Bronstein (79:07)

And. And Joseph, what about people at the business at A and A. You. It sounds like you were present enough that they weren't, you know, that you were present enough for that early transition, those early couple of months.

Joseph Cruz (79:20)

Yeah, the, the first week after I bought it, I took a week off and I was pretty much at the business every day for that first week. I was honest with everybody of what my positioning was, you know, that I'm waiting to get the bonus, you know, in February, March. They all understood it. Yeah, I remember in the day one speech, it was really communicated with the seller. You got, you have to sell me, right? You have to put your own trust in me. And I remember him, you know, saying to everybody that he sold the business. And here's Joseph. He didn't say anything about building me up. So I would say you should definitely communicate with the seller exactly what to say because they're probably gonna get all emotional about leaving the business. And I could tell he was emotional, which is why he probably didn't even remember to, you know, introduce me and build me up and, you know, demonstrate that trust. But yeah, no, during the first week, you know, I was honest with everybody, was. I was very transparent, you know, told them what I want to do, but, you know, really just listen to them and built a good enough relationship for everybody to really, you know, be excited about what the, the changes which, you know, most of them were happy with it Great.

Ted Bronstein (80:39)

Well Joseph, let's now turn to, to what you've learned or some of your takeaways lessons stories from this this year of ownership or year and a couple months of ownership as I keep saying. You, you've posted about this on LinkedIn. We'll, we'll, I think you have four articles. We'll link to all four of those in the show notes for people who want to read them. They're great, great write ups of as you've gone and you know, lessons from the trenches. So I plucked out a few things from those articles that I'd like to just go through with you. The first, you've already touched on losing the GM two weeks before close. You we've heard about how that ended up in the you structuring an earn out to mitigate that risk. But say other than that, the kind of, the mechanics of how you, how you kind of try to mitigate that risk, that would, that would still be scary. And how did you approach that and what was the upshot and how it all worked out?

Joseph Cruz (81:36)

Yeah, no, initially I was scared. I mean I was like, I don't know how I'm gonna do this. But you know, after added the, the mechanic of the earn out plus told the seller that he needs to stay on. I was like, okay, this is enough for, for me to continue. I would say after I left 5th 3rd to work in the business without the GM, it really forced me to learn everything about the business in, in three months. And the GM was doing so much where, you know, that was part of the selling point of the owner wasn't doing a lot. So that's why I liked it. So now on the flip side, he was doing so much where the owner didn't, you know, didn't know where some of the things were. So I was forced to learn it for those, you know, first three months I was there before the owner left. And I would say it was a blessing in disguise just because it forced me to figure everything out. And I knew if the GM was still there, he was a, he was a great worker. He knew exactly what to do, every product, where to get everything. But it also forced me to create resources systems, writing things down right, a lot of things that you want a business to have before you bought it, I pretty much was forced to do at the beginning. And it also allowed me to start the culture change of how we're doing things differently. If the GM was there, I could have easily seen it being easy from my perspective because there was a guy just doing Everything. But then to create little changes in the business, I think it would have been a lot more difficult. Not because the GM was, you know, difficult, just, but just because he did everything. And I, you know, I. Looking back at it now, I'm. I'm happy that it worked out the way that it worked.

Ted Bronstein (83:37)

Writing everything down was something that you highlighted as super key in one of your takeaways. Say, say is. Is there anything more to say about this? You're talking to an audience who understands SOPs and, you know, getting things out of an owner GM's head and onto paper. But is there anything more to say than, than what we all kind of intuitively understand here?

Joseph Cruz (84:00)

Yeah, I mean, I would say one of the biggest things that I was just shocked by when I got into the business was, you know, that we have maybe like seven to fifty to a thousand different SKUs, and when we have to order something, I'm like, how do I know where to order something? And only the GM and the owner knew in their head where to go, what to buy, what it was called. I was like, this is, this is crazy.

Ted Bronstein (84:30)

So even before and, and terrifying.

Joseph Cruz (84:34)

Yes, terrifying, because there's no way to learn how to do the job. So it was more so just creating. I remember one of the first things that we did was create a vendor list of every vendor and everything that we buy from that vendor, and we still use that to this day. So writing things down like that and even like, you know, writing down the logins and the passwords to. I remember the owner was freaking out about not knowing the password to the ups, and I said to write that down because the GM knew that. So it was a lot of just, you know, resource materials. You know, we now have a SharePoint where everybody can go before. There was no shared folders or anything. There was no communication through the computer. So a lot of writing things down that, you know, we could be used for training materials, that's, you know, one of the bigger things that I did for the first year was great materials that we could use to train other people.

Ted Bronstein (85:36)

One thing I heard you say much earlier, Joseph, was, was, I think you said, like, part of your. Why is becoming an expert?

Joseph Cruz (85:44)

Yeah.

Will Smith (85:46)

Did I hear you say that? Well, I, I'm not sure I've heard

Ted Bronstein (85:48)

somebody say that before. What, what did, what did you mean? And, and what reminded me here is that the GM being gone and you having to download everything from his and the owner's head and, and write everything down accelerated your own, your own learning curve. So that you could become an expert faster. But anyway, what is this goal of becoming an expert? What do you mean by that?

Joseph Cruz (86:09)

I'd say it all started, you know, that becoming experts. It stemmed from my days back at 5th 3rd, where, you know, becoming a subject matter expertise was, you know, my goal at fifth Third. Right. So even though I was able to talk about financial products, high yield, investment grade, talk about the market, I really want to become an expert in like an actual industry. But it's very difficult when you're coming from like a financial advisory perspective. Like you don't really get into the, the, you know, the inner workings. So when I knew that I was going to buy a business, I want to become an expert in that industry. And even, even no looking at what I'm doing now, you have to be fully engulfed in whatever business you're doing. You have to join every trade association, you have to talk to every vendor, every customer, every competitor, and you have to really understand the product. So that's, that's where I want, that's part of my. Why was I really want to, you know, looking back in my life, I want to know, you know, what was I an expert in? And I guess it's going to become sewer and water. So that was that. But, you know, even the GM and the owner, you know, you know, they were great, but they were not sewer and water experts. It's a different, it's a different. There's things that they did that, you know, that, that, or there's things that they didn't do that I'm doing now. And I would say now I know way more about sewer and water than both of them. You know, even after, you know, six months to a year, they knew a lot about the business and how it operated. But being a sewer and water expert is a lot different than just, you know, processing invoices and, you know, just selling things. There's a lot of, there's, you know, there's a lot of different things and become an expert, like I said. Said before.

Ted Bronstein (88:23)

Yeah. And so your expertise, I feel like is probably industry expertise. What about the nuts and bolts that you're literal nuts and bolts that you might be selling? All those SKUs all, all that inventory, how it's used. We're not talking about you learning that stuff. I mean, functional, but you're talking higher level subject matter expertise, right? Industry expertise.

Joseph Cruz (88:47)

Yeah, I would say it's more so industry expertise. Who does what locally? Who's the real players? Why are these players getting those contracts? Who's supplying who's the big supplier. Like really understanding that, but also understanding the product under underground as well. But yeah, as far as like the tools and equipment that we sell, you know, I know enough to be dangerous, but it is extremely hard to be an expert in everything that we sell. It's just you need to know enough of the application, the differences of, you know, you know, generator, you know, A versus generator, B, you need to understand it high level enough. But I'm never going to become an expert in understanding equipment and being a mechanic. Yeah, you know, that, that's just stuff that is way beyond me. But you know, to begin become an expert in the industry and how things work, that's where I think I can actually, you know, you know, take time to, to be home.

Ted Bronstein (89:47)

Yeah. Great. One of your other learnings, Joseph, this was from June, last June. So you would have been about six months into the business was the difference between revenue and cash. So revenue was looking good, cash less. So we've already heard about how tight things got and buying a seasonal business in the, in the down season. Tell us about this learning.

Joseph Cruz (90:12)

Yeah. Now in a super working capital intense business like a distributor, you really have to understand when customers pay you and when vendors are expected to pay you. One of the first things that I focused on in the business for the first year was really rectifying a lot of relationships with my vendors because I would say the old owner really stretched out his payables like really like Everybody was not 30, but actual payable days was about 70. And you know, that, that is, that is long. So you know, really rectifying that and paying vendors on time, but also, you know, understanding that some customers just, you know, pay 65, 70 days. And I would say in this industry, and specifically for Ana, there's definitely a balance of trying to get that, that sale, but also knowing that this customer could potentially pay slow. And I'm still in the mindset of getting as much sales as possible. I don't think I've afforded the cushion yet to really pick and choose my customers that pay well. But you know, it's just from the cash flow perspective, it's really understanding the expectation from when customers are going to pay you and when you're going to pay your vendors. So that's a real issue. You know, even though you're selling, you know, we were 20 better last year in revenue, but you know, when you look at the cash, you know, you know, when you look at the bank at the end of the year, you know, it's lower than the Previous year. Why? Right. It's tied in inventory, tied in, you know, paying vendors, etc. So really getting a grasp on your weekly cash flow is really important. Which know, I'm still trying to get the hang of it now, but I have a way better sense now versus at the beginning.

Ted Bronstein (92:14)

But you and you started a cash flow forecasting.

Joseph Cruz (92:17)

Yeah.

Ted Bronstein (92:18)

Weekly ritual.

Joseph Cruz (92:19)

Yes. Every, every Saturday morning I pretty much do a couple things. I look at, you know, every transaction in the bank account. I do my, you know, my historic cash flow of, you know, what I thought was going to come in versus what I actually got. And I'll just say this, trying to project out when I'm going to receive cash from customers is impossible. Is that it is impossible to predict out when my customers are going to pay me. I know on average they're going to pay me in 45 days. But to say I'm going to receive this amount next week, it's impossible to project out. And that's where it's made me really appreciate recurring revenue versus you know, the non recurring when contractors are going to pay me. So I, you know, do the, the cash flow report, you know, look at my bank account, look at every transaction, look at, you know, my, you know, purchase orders, look at my sales orders. But yeah, the cash flow projection and you know, trying to understand when we get paid is, is very, very important.

Ted Bronstein (93:27)

And I heard you say that the previous owners payables were aggressive meaning when you guys paid your vendors. But that would help your cash flow position because you're holding on to cash and not paying your holding on to cash and stretching out when you actually pay your vendors what you owe them. So I would think that that would be a good thing. But it sounds like reading between the lines, it can, if you are too aggressive there, it can damage the relationship with vendors. You become a customer that they don't love because you don't pay on time or. Yeah, very, whatever.

Joseph Cruz (94:06)

Yeah, it will help with their cash flow. But one thing I found out after I bought the business was the business lost a distribution line for a specific kind of pipe due to slow payments from the old owner. But I didn't know that before I bought the business. I found out through, you know, talking to this person, talking to that person. And the general reputation was a slow payer. Customers love, loved him, great guy, nice guy. Right. You know, allowed them loud. The owner allowed them to pay him in whatever, 70, 90 days. Vendors, different story. And even though the seller was a great guy, nice guy, that's the reputation Once you have that reputation, it takes a long time to fix it. To fix a reputation of being a slow payer. And the most important thing to a distributor is what manufacturing lines are you representing? So if you have second tier, third tier distribution lines, that's way different than having the tier one distribution lines that you could potentially have if you're paying vendors on time. So the relationship balance versus paying. I'd rather pay vendors on time, even if it's a reputation or even if it's, you know, tighter on capital. I'd rather my reputation with my suppliers is everything because without them, I don't have a business.

Ted Bronstein (95:35)

In April, your April piece you wrote, be patient, then be urgent. What is that lesson?

Joseph Cruz (95:42)

Yeah, I'd say so the be patient part is trying to. That was trying to expand into a lot of different initiatives. So I would say in the small business world, there's a lot of shiny objects. And I don't know if you've talked about this, but it's like the shiny object syndrome where there's a lot of opportunities here, opportunities with customers, vendors. But it was being very selective and patient in what you really value as what is the actual needle movers. But once you find that out, then really be urgent in growing that. So that specific topic was likely to my focus on growing service because at the beginning, when I bought the biz, I didn't really appreciate the service side of the business. But after the winter, after the first couple months, really understanding the value that having a good service side does for my building material side, that's where I really focused on. So it's really making sure I listen to the mechanics. What else do they need? Trying to expand into other service lines. And then I ended up hiring another mechanic in June. So, you know, I had one mechanic when I bought the business. Now I have three. So that's where I'm really focusing right now. But you know, I think you got to really understand what, what it, what you need to be urgent on. But you know, you got to be very selective on, on your time. So that's. Yeah.

Ted Bronstein (97:21)

A bunch of your takeaways from across a number of the articles actually were about surprise, surprise, people.

Joseph Cruz (97:29)

Yeah.

Ted Bronstein (97:30)

And culture that you set your leadership. So one thing that I really liked was you're learning that the owner sets the emotional temperature.

Joseph Cruz (97:40)

Yeah.

Ted Bronstein (97:41)

Remember that one?

Joseph Cruz (97:42)

Yep. So that one. It's. I think energy is, is a big thing. I think whenever you're talking to people, being a leader, your energy and tone is very important. So even if you're Having a really bad day. Customers are pissing you off, vendors pissing you off, people paying slow. You need to have the same level of energy that you had when you're having a great day. And I think that is the job as the leader of the business is to set that emotional tone. Because I really feel like the emotional tone that you sent, that you set, your employees are gonna feed off. If you're slow and you're depressed. I feel like your employees are not gonna be happy and they're gonna be depressed as well. So that's why whenever you go in for the day, you gotta bring that level of energy just. Cause I really feel like that the employees feed off of it.

Ted Bronstein (98:48)

It's. At least it landed on me that one, Joseph. Because my, I think that's one of my own weaknesses. I'm, I'm very subject to my own moods. So if I get in a bad. Well, I guess probably we all are. Maybe I'm just moodier than, than, than the, than the norm. But I see it in my, not only my professional life, but my family, my family life as well. It's, it's definitely something I could work on and understand. But you just. That. Yeah. Understanding that your mood as leader actually impacts people. It's not just, you know, self contained, it's, it's, it's bleeding out on it. Everybody else is, is probably pretty basic, but one I'm still struggling with to this day.

Joseph Cruz (99:31)

It's impossible to let your work not impact your emotion. But I think if you're going to go into being a leader and an owner, you have to always be aware of trying to delineate those, those two and it's. I'm not, I'm not perfect. Like there was another day where I knew that I was sad and my tone came off. But after that I was like, oh, I gotta, I gotta bring it back. Right. So it's just, you gotta, you just gotta always be aware of it.

Ted Bronstein (100:03)

Yeah. Yeah, it's great. I love this one from. Also from last December. From December. So a couple months ago, the real unlock wasn't quote unquote, finding the perfect people. It was setting expectations, creating repeatable onboarding, giving autonomy while building checks, letting leaders emerge. In other words, it was finding good people, but there's maybe no such thing as the perfect person. And, and then it's what you build around them in the, in the culture that you create.

Will Smith (100:37)

I guess.

Joseph Cruz (100:38)

Yeah.

Ted Bronstein (100:38)

Say, say more about what you meant.

Joseph Cruz (100:40)

Yeah, no, I would say leading into all of that, the, the, the biggest Thing that I did at the beginning was listening to the employees. One. One thing that I think everybody should do when they buy a business is ask every employee, what's five things that you like about the business? What's five things that you think can be improved? And you aggregate those five things that could be improved, and then you focus on the top priorities. So I think once you do that, just even listening to them and taking into that, you know, taking their opinion to heart, you know, they understand, like, okay, this guy really wants to, you know, improve the business is looking. Listening to me. And I will say that even doing that was. Was big because the old owner was just. He wasn't. He was a good owner, but he didn't really appreciate full transparency, which I'm all about. So I. I think asking them questions, listening to them, but also being transparent of what I'm going to do really set the tone of the expectation of how I want the business to be run. So I think starting there was great. Where, you know, listening to them was big. Setting expectations and executing on what I was gonna. What I was gonna do or executing what I was gonna say. But also, like, another thing as far as, like, engraving culture was. I'm real big on. On discussing things. So we have a meeting every day in the morning. Just like, quick five minutes, ten minutes, you know, how is everybody doing? You know, what's the top priorities for the day? When I first did that, people were like, what the heck is this? Like, what? You know, so now it's. Now it's normal thing. Now my general manager leads that. So, you know, starting that at the beginning and having that as, you know, part of the team, you know, team culture now, it's just a normal thing. So I think it's slowly instilling habits within everybody, you know, having people discuss things if something's not working. Tell me about it. I think really engraving that really helps the business grow. And, you know, and no, I'm. I'm allowed to not be there anymore. Right. The GM can run it because he knows how I like to do things, so he's doing things that I did at the beginning.

Ted Bronstein (103:16)

So if somebody's out there looking for some, you know, gm.

Joseph Cruz (103:19)

Yeah.

Ted Bronstein (103:19)

For their business, and they're looking for that perfect person, and they're not finding them. Not finding them, not finding them. Do you think that maybe they're doing it wrong?

Joseph Cruz (103:27)

I think aside from looking for that perfect person is. I firmly believe that each person has their main skill or, like, what they're best at. And I think it's the job as the leader to figure out what are they really good at and make them do that thing over and over again and really bring out the best in them. So, for example, one of my mechanics, he's really good at working on a specific piece of equipment or working on three or four pieces of equipment. But instead of him being the perfect mechanic and doing everything, I've molded him just working on that kind of stuff to make it as efficient as possible. My inside sales guy is really good at talking to customers, so he's the main guy talking to customers all the time. So it's really like, I think you're never going to find the perfect employee. Like, I'm nowhere near perfect, but it's trying to figure out what is everybody best at and trying to put that all together.

Ted Bronstein (104:36)

Last point here, and then we'll close up. Joseph, I loved this. This little excerpt you said. I diffused an argument between employees with a conversation that ended with, quote, discussions like this may make me want to do good work for you, end quote. By one of your employees. And then you say, that was by far my proudest moment so far. What happened?

Joseph Cruz (104:57)

Yeah. Yeah. So it was. It was a heated discussion between two of my employees. One employee likes to approach a certain problem one way. The other employee likes to approach it a different way. So it was a matter of talking to both of them, really listening to what is the core issue of why they can't work together, and then trying to find common ground. A lot of it. A lot of the things that I think I just do is just listen to people and then try to figure out the solution. But then after listening to what was the core issue, it was merely of a very simple thing that the one employee could have done better. And then it was bringing them together, trying to get them to agree on that one solution, and then that one guy saying that. So I think it was because the old owner would have never done that. He would have just said, this is how it's done. You're gonna do it.

Ted Bronstein (106:03)

Yeah.

Joseph Cruz (106:04)

So I think that the contrast of listening, understanding, and implementing was such a stark difference of just doing as I say that it made him, you know, say that. And I. Yeah, I remember I told my wife about that. I was like, this is. This is great. This is awesome feeling. So that was. Yeah, definitely still one of my, you know, proudest moments. Yeah.

Ted Bronstein (106:28)

Great. Well, congratulations for it, Joseph. That's great. Tell us where the business is today in. In terms of numbers, and we'll close out there.

Joseph Cruz (106:36)

Yeah. So 2024, it was about 1.2 million. Last year we did about 1.5 million. 55 of that growth was due to service and then 20 was material and the rest was equipment. And then this year the goal is 2 million. So we're off to a good track in January and February, you know, beating the budget. We just landed our first hundred thousand dollar contract that's going to go out in June for selling this, this clay bentonite type material. And I'm working on a job right now where it's 3 and a half million dollar five year contract with a pretty big general contractor doing some, some work in o'. Hare. So the way I would summarize, you know, this year is there's a lot of good things in the air right now. Now I'm just waiting for a couple of them to actually drop. Whereas the first year was just stabilizing understanding now figuring out where we could press for growth without stepping on toes. Now I think this year is going to be a pretty, pretty good year.

Ted Bronstein (107:44)

And I think you said you're eyeing 5 million in total revenue for 2030.

Joseph Cruz (107:49)

Yeah, that is the goal. For just a. Yes. Yeah, that is the goal. Why? I don't know, I just picked that number because I thought it was realistic and I like, I like the number 5 million.

Ted Bronstein (108:02)

And when you say for just a, a, what do you mean by that?

Joseph Cruz (108:06)

So, you know, definitely planning to go grow through acquisitions. You know, my long term goal is to build a platform business with the combination of a very strong distributor and equipment repair side. There's a lot of room for potential, you know, organic growth, but also inorganic growth through acquisitions, you know, and I've talked to a lot of those companies already. So now I'm trying to figure out what are the best people pieces to put together down the road. But I think A and A can get to 5 million on its own. But I'm definitely going to be, you know, talking to other businesses to partner with and invest and you know, potentially acquire.

Ted Bronstein (108:48)

And where you are now in your day to day, Joseph, is despite the fact that all of the knowledge was locked up in the GM and owner's heads, didn't even have a list of vendors written down anywhere. You painstakingly extracted all that information, wrote it down, centralized it, including a lot of other unglamorous work, cleaning the bathroom for the first time in 10 years. I think you talk about doing, dusting old boxes of inventory that literally had, you know, centimeters of dust on them because they hadn't been Touched in so long.

Will Smith (109:21)

All of this stuff you've basically done

Ted Bronstein (109:23)

in the first 14, 15 months. And now you're mostly working on the business, right?

Joseph Cruz (109:28)

Yeah, I mean, I'd say working on the business like 60, 70% of the time. I would say I'm still working in the business, you know, 40%. I'm still there three and a half days, you know, since I have the. My daughter now I'm here at home, you know, watching her.

Ted Bronstein (109:44)

Yeah.

Joseph Cruz (109:45)

And stuff like that. So, you know, I'm not there full time right now, which is great that I can afford that flexibility right now. But I'm still, you know, sending out quotes, talking to customers, seeing customers, talking to vendors, you know, still putting out fires. Yeah, I, I think I'm still going to be working in the business. I. I don't see an end in sight. I mean, I think it's just always something that I enjoy doing. I love talking to customers, making sales, you know, really talking to. To customers, understanding who their, you know, families are and all that. I really enjoy that. So. But, you know, I would say I'm definitely working on the business more than I was, you know, at the beginning.

Ted Bronstein (110:30)

Yeah. And to the extent that you're working in the business, a lot of that is at your discretion, it sounds like, because you enjoy it, because you feel like it's. It's also just part of continuing to understand your own business and learn. And I think you and I talked about on the pre call that becoming an expert again and just really, really learning your business and your industry by being in the business for some during the early years of your ownership is a model that, that not. Is not to be run away from. It's to be embraced.

Joseph Cruz (111:04)

Yeah, everybody needs to work. Yeah, everybody needs to work in their business 100 for. Until they're comfortable talking to customers and selling them whatever they do. I think whatever time that is, you have to do it. You need to understand the operations, the sales. Right. The people. Because you're also, you know, when you're doing that too, you're gaining the trust and respect of your employees. Because if you automatically start working on the business, I mean, I don't know my employees be like, what is this? Like, you know, you haven't even earned the right to, you know, to. To figure out what to do. Right. So I don't know, that's how I feel about it. And, you know, I. I think it helped me figure out how to work on the business.

Ted Bronstein (111:52)

Well, Joseph, let's, let's leave it there. We will link to your LinkedIn. We'll link to the pieces you've written on LinkedIn. We'll link to ANA. ANA equipment.

Will Smith (112:01)

Right?

Joseph Cruz (112:01)

It's a.

Ted Bronstein (112:02)

A dot equipment.

Joseph Cruz (112:03)

AA equipment. My. My wife made that. It's. It's a unique URL.

Ted Bronstein (112:10)

AA equipment. Great. Really appreciate the time we went over today, but there was a lot to cover. Excellent interview. Thank you sir, for joining us.

Joseph Cruz (112:18)

Yeah, thank you. Appreciate it.

Will Smith (112:19)

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Ted Bronstein (112:28)

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Ted Bronstein (112:47)

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Will Smith (112:50)

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Ted Bronstein (113:02)

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